Far fewer venture capital deals closed during the fourth quarter of 2006 than predicted, according to a survey released today by the Mid-Atlantic Venture Association.
The quarterly poll of local venture capitalists found that only 72 percent of respondents completed a deal during the fourth quarter, compared with the 97 percent that had previously projected they would finalize an investment during that time.
While number of deals fell short of expectations, the percentage of investors who closed a deal remained on par with the fourth quarter investments in 2004 and 2005.
The survey’s findings point to optimism in the investment community, not an ailing industry, Mid-Atlantic Venture Association Executive Director Julia Spicer said.
“The thing that’s encouraging is the fact that there’s more energy and time being spent on new deals,” Spicer said. “There are opportunities out there for investment. … I think it’s still very positive. The sentiments I hear from those who are out in the market is the deal flow is very strong right now.”
Venture capitalists invested nearly $138 million in local companies during the fourth quarter with 48 deals, a healthy level of activity but still behind that in Silicon Valley and New York. In all of 2006, the Washington regionsaw 204 deals and $1.125 billion in investment dollars. Biotech firms won the most support in the fourth quarter, $50 million over 10 deals, besting companies in the software and telecommunications sectors for the top spot. Telecommunication firms won the year with more than $308 million invested in 2006.
The survey also looked to the first quarter of 2007 and found that 85 percent of investors plan to close at least one new deal, with the majority of those deals within the region. Nearly 60 percent of respondents said that between 40 and 100 percent of their investments will be in Washington area.
